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Dow 30 Stock Roundup: Boeing Q4 Commercial Deliveries Up Y/Y, Merck Buys NASH Candidate

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The index enjoyed an excellent run this week and has now gained over five successive trading sessions. Trade talks between the United States and China sparked optimism that a resolution to the conflict was likely in the near future. Meanwhile, the Fed Chair Jerome Powell continued to maintain his new-found market friendly policy stance, pleasing investors in the process.

Last Week’s Performance

The index gained 1.8% last Friday buoyed by robust job data, a dovish statement by the Fed chair and positive developments on the United States – China trade war front. Friday’s market recovery came as a major relief to investors after severe losses in the previous session.

Non-farm job additions for the month of December 2018 came in at 312,000, the highest level since February 2018. Moreover, November’s job additions were revised to 176,000 from 155,000 and October’s job additions increased to 274,000 from 237,000.


Further, Powell said that the Fed will be closely watching how the economy performs in 2019 before taking any rate hike decisions. Meanwhile, high-level delegations of the United States and China were scheduled to meet on Jan 7 and 8 in order to discuss a possible trade deal.

The index increased 0.5% last week. The first week of January was a relatively better one for Wall Street. Strong economic data, Powell’s hint of softer monetary stance by the Fed in 2019 and some positive developments on the trade war front acted boosted investors’ confidence.

The Dow This Week

The index rallied for the second consecutive day on Monday, increasing 0.4%. Notably, the two-day long meeting between high level delegations of the United States and China resumed on Jan 7.

The foreign ministry stated that China wants to resolve trade disputes with the United States on an equal footing. Further, U.S. Commerce Secretary Wilbur Ross said that he is hopeful that the trade conflict will be resolved satisfactorily this time.

The index gained 1.1% on Tuesday owing to cautious optimism on the part of investors regarding a possible solution to the ongoing trade war between the United States and China. However, partial government shutdown remained a concern.

Trade negotiations between the United States and China were extended for one more day. Although no broad-based agreement has been reached so far, China has already approved five genetically-modified crops for import that will mostly benefit U.S. agricultural exports.

The index increased 0.4% on Wednesday owing to positive developments on the trade front and Fed Chair’s recent dovish policy stance. The three-day meeting between mid-level delegations of the United States and Chins ended on a positive note although broad-based solutions remained elusive.

According to FOMC minutes released on Jan 9, the central bank will be patient about future interest rate increases. Several Fed officials have argued that lack of inflationary pressure in the U.S. economy does not call for a tight monetary policy, which may act as a hindrance for steady growth of the economy.

The index gained 0.5% on Thursday, escaping from correction territory. This is also 10.1% higher than the recent low it fell to on Dec 24. The Dow has now gained 2.9% year to date and 5.7% in the past five days.

Optimism over trade talks prevailed even as the Fed Chair reiterated his newly found market friendly stance. Speaking at the Economic Club of Washington, Powell said the Federal Reserve will adopt a “flexible” and “patient” approach to monetary policy since inflation was “under control.”

Components Moving the Index

Apple Inc. AAPL recently partnered with Samsung, one of its long-standing rivals, to make iTunes content available on the latter’s smart TVs, per CNBC.

The Korean smartphone maker will include an app to its smart TV sets in the upcoming months, allowing users to easily watch iTunes movies and TV shows. Additionally, users can purchase and rent new content from the app.

Samsung noted that it will add Zacks Rank #3 (Hold) Apple's AirPlay 2 software to the TVs, thereby allowing iPhone and iPad users to stream their device content on smart TVs.

Apple’s partnership with Samsung is expected to help the company reach customers outside the iOS ecosystem, thereby boosting its service reach. Notably, Samsung commanded 33% smart TV market share in the United States in 2018, per Statista, and is also the world’s largest TV manufacturer with more than 20% market share. (Read: Apple Partners With Samsung, Boosts Services Reach)

Exxon Mobil Corporation XOM recently announced that the company has commenced drilling the Haimara-1 exploration well, located 31 kilometers east of the company’s Pluma-1 discovery in the southeast Stabroek Block, offshore Guyana.

It is one of the two wells to be drilled this month, as planned by the company. At the site, the company is using a harsh environment DP Class 3 drillship, namely Stena Carron, which can drill up to a water depth of 10,000 feet.

Zacks Rank #5 (Strong Sell) ExxonMobil has plans to use Noble Corporation plc’s NE Noble Tom Madden drillship for the Tilapia-1 well, which is the second one slated to be drilled this month. The well is located in the Turbot region.

The commencement of the drilling of Haimara-1 well on schedule is a sign of ExxonMobil’s confidence in the region, which recently witnessed an unfavorable event pertaining to the Venezuelan navy. The company reported that its activities offshore Guyana were not affected by the event. (Read: ExxonMobil Commences Haimara-1 Drilling Offshore Guyana)

The Boeing Company BA recently announced program deliveries across its commercial and defense operations for the fourth quarter of 2018. The figures show a 13.9% rise in commercial shipments and 25.6% decline in defense shipments from the previous year.

The company reported commercial deliveries of 806 jets in 2018, up on higher deliveries of 737, 767 and 787 airplanes. The figure came below the company’s delivery guidance of 810 to 815 planes.

In 2018, Boeing delivered 580 models of the 737 airplanes, followed by 145 deliveries of the 787 model. In the year-ago quarter, the company had delivered 529 units of the 737 and 136 units of the 787 model. Boeing delivered 48 units of the 777 model in 2018 compared with 74 units in 2017. Other deliveries included six 747s and 27 767s compared with 14 and 10 units, respectively, in the prior year.

In the defense and space business, Boeing’s deliveries were 98 in 2018, down 43.7% from 174 a year ago. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intel Corporation INTC made a slew of announcements at CES 2019. The company’s leaders, Gregory Bryant from Client Computing Group (CCG), Navin Shenoy of Data Center Group (DCG) and Mobileye’s Professor Amnon Shashua unveiled the latest innovations.

Zacks Rank #3 Intel launched the much awaited Xeon Scalable CPUs featuring robust artificial intelligence (“AI”) and memory capabilities. Notably, it has been selected by Alibaba BABA already.

The company showcased Xeon Scalable processor on 10nm Ice Lake architecture. Intel anticipates shipping of the latest Ice Lake server processors, compatible with 14nm architecture (dubbed Cooper Lake), in 2020.

Additionally, the company announced that it will introduce 9th generation desktop solutions in January. Intel showcased latest hybrid CPU architecture client platform, dubbed as “Lakefield” by the company. (Read: Intel at CES 2019: Xeon CPUs, AI-Chip & Alliances)

Merck & Co., Inc. MRK announced that it has exercised its option to in-license a once-monthly insulin sensitizer, NGM313, from partner NGM Biopharmaceuticals, Inc., being developed for the treatment of NASH and type II diabetes.

With this deal, Zacks Rank #2 Merck gets exclusive global rights to develop, manufacture and commercialize NGM313, now renamed as MK-3655. The company made a payment of $20 million to NGM for securing the deal.

Meanwhile, Merck’s PD-1 inhibitor, Keytruda, gained five new label expansion approvals in Japan. These included a first-line treatment option for advanced non-small cell lung cancer (NSCLC) as both monotherapy and in combination with chemotherapy, an adjuvant therapy for melanoma and for advanced microsatellite instability-high (MSI-H) tumors. (Read: Merck Buys NASH Candidate, Keytruda Wins 5 Approvals in Japan)

Performance of the Top 10 Dow Companies

The table given below shows the price movement of the 10 largest components of the Dow, which is a price weighted index, over the last five days and during the last six months. Over the past five trading days, the Dow has gained 2.4%.

Next Week’s Outlook

Markets are enjoying an excellent run at the start of the year with multiple factors boosting stocks. While trade talks failed to result in an immediate deal, they have successfully assuaged investor fears. Market friendly comments from the Fed Chair have also boosted stocks this week.

However, concerns like the partial government shutdown are likely to plague markets in the days ahead. This is why it is best that investors remain prepared for heightened volatility in the week ahead.

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